But Will It Stick?

Continental Airlines raised fares again last week, and could go for more in response to a rival's move to increase the cost of some plane tickets.

It's the latest in a flurry of pricing adjustments as the airline industry, still reeling, financially, tries to stem the tidal wave of red ink.

Continental raised fares by $10 on flights originating or ending in its three hubs: Houston, Newark and Cleveland, spokesman Rahsaan Johnson said.

Blame Oil

The carrier said rising oil prices were to blame for the fare increases. That was the same reason Continental cited last week when it initiated a systemwide $10-per-trip hike.

That increase was matched by most other major airlines, but Northwest matched it only on "selected" routes as of Saturday. As a result, all the major airlines had scrapped the increase by Monday.

However, Northwest turned around Thursday and put a $10 each-way fuel surcharge in place on its worldwide advance purchase fares.

The Houston airline's increase was matched by American, Delta, US Airways and Midwest Express in Houston, Newark and Cleveland.

In raising its fares, Northwest also blamed the rising cost of jet fuel.

Bail-Out Was Bad News?

One airline industry analyst reported last week the airline industry might not be in the terrible shape it's in if Washington hadn't agreed to a $10 billion bailout after the 2001 terrorist attacks.

"In retrospect, had Washington allowed carrier failures post 9/11, surviving airlines would likely be better off today," J.P. Morgan Securitities analyst Jamie Baker said.

Baker says, war with Iraq will only make the situation worse. "In our view, additional wartime aid to the industry would only prolong its agony. Don't look for Southwest and JetBlue to ask for handouts, but Continental likely will."

Last week, the nation's airlines called upon the government to tap the Strategic Petroleum Reserve to "moderate" the impact rising fuel costs have on the nation's economy.

The Air Transport Association testified that fuel costs have jumped more than 100 percent during the past year.

The industry group told a Congressional committee that every penny increase in the price of jet fuel costs the airline industry about $180 million per year.

For Continental, a $1 increase in the cost of a barrel of crude oil equates to a $36 million increase in operating costs for the airline.

"Crude oil is up $4 a barrel in one month, and $11 a barrel in three months," Johnson said. "For every $1 increase in the cost of crude, Continental's expenses increase $3 million a month."

The possibility of an Iraq war is also keeping some transatlantic passengers home. "During the first two weeks of February, industry Atlantic load factors are estimated to have declined more than four points despite aggressive discounting, versus flattish load factor trends domestically," Baker said in his report.

Baker's report also suggested that if United Airlines has to go the way of the dodo instead of pulling up from its nosedive into bankruptcy, the surviving airlines would actually benefit.

FMI: www.airlines.org